Apple Inc. (AAPL) iOS App Revenue Up By 60% Than Android In Q3 2014

The mobile app industry has a varied demography, and it appears to be changing in tune with developments in the mobile and computer industries. The recent boom in smartphone adoption in the emerging market has brought about some interesting figures into the app scenario for a number of app downloads from Apple Inc. (NASDAQ:AAPL) iOS App Store and Google Inc. (NASDAQ:tremendous) Play Store. The established markets, like United States, Japan, China, UK, South Korea and Germany, however continue to be at a higher rung on the ladder in revenue generation for both the app stores.

Download vs Revenue rivalry in the two camps:

The reports from App Annie and MEF, suggests that riding on the backs of high growth in smartphone penetration in the emerging markets, Google Play Store managed to clinch 60% higher quarterly app downloads than iOS App store in Q3 2014, which was at par with the lead in Q2 2014. The growth over the past year has been phenomenal for Google Play Store, as it was ahead only by a marginal 25% in app downloads as compared to iOS App store in Q3 2013.

Despite lagging in app downloads, iOS App Store raised a significant 60% higher revenue than Google Play Store. Japan led the way for iOS revenue in Q3 2014.

Why despite generating lesser revenue Play Store records a higher no of revenue is the simple reason that Google offers more than three-fourth of its apps free of cost. As Android is an open source platform, the cost of developing an Android app is very meager compared to the iOS Apps. And studies suggest, the user base on Google Android prefer free-apps.

Emerging markets favor Google Play Store:

With increasing smartphone penetration, other nations in the APAC and ASEAN regions have shown huge leap in the no. of app downloads from both the stores. Brazil just behind China recorded a staggering increase of almost 200% whereas Indonesia displayed a growth of 170%. Close in line were Indonesia and Mexico both of which recorded an increase of 160%. With key players delving deeper into the competition and redefining pricing of smartphones in the emerging markets, has led to this surge in app downloads in these regions.

The growing popularity of Google Play Store in the emerging market comes hand in hand with increasing size of the smartphone market. Driving away from the scenario in China, the primary benefactor in Brazil regions was Google Play Store. In India too, the no. of downloads from Google Play Store saw a rise. While Mexico, Indonesia and Turkey occupied 6th, 7th and 8th positions in Google Play Store downloads, Brazil and India were behind United States only. In an attempt to sink its teeth deeper in Brazil, Apple set up its first retail store in Rio de Janeiro in the first quarter of 2014 and has seen a rise in the app downloads.

In the APAC region, as reports suggest India is going to spearhead the tech devices (including smartphone and tablets) sale in the oncoming year, so is the presence of Google Play going to expand, as key players like Xiaomi and Motorola keep bombarding the market with low priced smartphones. Even the Android One initiative by Google is going to play a crucial role in boosting the Play Store download figures.

In Turkey the increase in investment in IT and Technology sector is leading to more smartphone awareness and adoption in the country and thereby popularizing Google Play Store. Riding on the back of this awareness the IT spending in the region in 2014 is expected to increase to around 9%. Similarly Mexico witnessed a rise in the smartphone adoption to 75% in 2013 which is expected to grow by another 40% in 2014. According to the App Annie and MEF report, around 65% of the devices were Android run.

The Indonesian market ousted Germany in volume of combined app downloads from both the stores. Both the stores are eyeing this region as a key market as it has been witnessing double-digit increase in quarter-over-quarter downloads for the last nine consecutive quarters. The vast population comprising of youth and middle-class generation combined with an introduction of 4G networks are the reasons being attributed for Indonesia being a pivotal player in the global app arena.

Germany, on the other hand, displayed a flat growth in terms of combined app downloads being in tune with the trend witnessed in many of the established markets. But in terms of revenue the country showcased a growth of 180% from Q3 2013 to Q3 2014. Tough steady but compared to more mature markets the emerging markets displayed miniature growth in terms of revenue.

China the new business hub for Apple:

The United States occupies the largest market share for combined app downloads from Play Store and iOS App store but China made its presence felt as app downloads in the country increased by around 10% in Q3 2014 from Q3 2013. Though Android has an extensive presence in the region, owing to preference of native language apps, the major chunk of downloads for Android comes from third party app stores. Thus, downloads from the iOS App Store comprise a major share in China.

In terms of revenue also China has contributed largely for the iOS App Store and the growth has been momentous from Q3 2013 to Q3 2014. China seems to be spearheading the expansion of Apple in the international arena. The second quarter earnings of Apple in 2014 from China comprised of a whopping $10 billion (including retail sales too). The Telco’s China Mobile, China Telecom and China Unicom have developed infrastructure for FD-LTE and TDD-LTE services due to which public will have access to high speed mobile networks and Apple plans to jump in on the profitability bandwagon by launching the iPhone 6 and iPhone 6 Plus in the country. Only time will tell how the devices fare in the market and how rewarding will the decision actually be for Apple.